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The US economy will become a Zombie Economy, with more and more vigour dependent on government spending and government support. Banks are already Zombie and more »
AIG's Rescue Had 'Poisonous' Effect, US Panel Says BusinessWeek
(Updates with Warren’s remarks in the ninth paragraph, panel’s comments on attainable unit bankruptcies in the 13th.)
By Hugh Son
June 10 (Bloomberg) -- American International Group Inc.’s bailout had a “baleful” effect on the U.S. financial system because it demonstrated the government would protect Wall Street firms from their own risk-alluring, said a Congressional panel.
The Federal Reserve could have acted earlier to find a privately funded solution for New York-based AIG before the September 2008 set free, the Congressional Oversight Panel said today in a report. The bailout, which has swelled to $182.3 billion, transformed banks’ monetary bets into fully guaranteed obligations, the panel said.
“The government’s actions in rescuing AIG persist in to have a poisonous effect on the marketplace,” said the panel, led by Harvard University law professor Elizabeth Warren. “The AIG deliver demonstrated that Treasury and the Federal Reserve would commit taxpayers to pay any price and bear any burden to prevent the keel over of America‘s largest financial institutions and to assure repayment to the creditors doing business with them.”
![Economy [2010]](/_cache/Economy/img/Collapsing_Us_Economy_4.jpg)
